Sources of the German Productivity Demise: Tracing the Effects of Industry-Level Information and Communication Technology Investment
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Theo S. Eicher
Abstract
While the United States experienced two successive labor productivity surges in 1995 and 2000, Germany’s productivity declined dramatically during the same period. We examine the sources of Germany’s productivity demise using the ifo industry growth accounting database that provides detailed industry-level investment information. While much attention has focused on the reduction in German labor hours, our data show that information and communication technology (ICT) investment in Germany was deeply lacking in the mid-1990s as compared with the United States. The transition to the new economy mitigated the German productivity slowdown, but did not reverse it. After 2000, we find that a recovery in Non-ICT investment was offset by a widespread collapse in German total factor productivity. Over half of the German industries (accounting for almost 50 per cent of German output) experienced negative total factor productivity growth. This second major difference between the United States and German industry performance explains Germany’s secular departure from the technological frontier.
© 2019 by Walter de Gruyter Berlin/Boston
Articles in the same Issue
- Special Issue on Productivity Growth
- Information Technology and the World Growth Resurgence
- Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data
- Of Yeast and Mushrooms: Patterns of Industry-Level Productivity Growth
- Sectoral Productivity in the United States: Recent Developments and the Role of IT
- Sources of the German Productivity Demise: Tracing the Effects of Industry-Level Information and Communication Technology Investment
- International Comparisons of Levels of Capital Input and Multi-Factor Productivity
- Information Technology and Productivity Growth in the 2000s
- Mind the Gap! International Comparisons of Productivity in Services and Goods Production
Articles in the same Issue
- Special Issue on Productivity Growth
- Information Technology and the World Growth Resurgence
- Information and Communications Technology as a General-Purpose Technology: Evidence from US Industry Data
- Of Yeast and Mushrooms: Patterns of Industry-Level Productivity Growth
- Sectoral Productivity in the United States: Recent Developments and the Role of IT
- Sources of the German Productivity Demise: Tracing the Effects of Industry-Level Information and Communication Technology Investment
- International Comparisons of Levels of Capital Input and Multi-Factor Productivity
- Information Technology and Productivity Growth in the 2000s
- Mind the Gap! International Comparisons of Productivity in Services and Goods Production
